The Reserve Bank of India (RBI) yesterday granted Paytm and 10 other entities to operate as payment bank. The other companies to receive the license includes Reliance Indutsries, Tech Mahindra, Idea Cellular, Aditya Birla Nuvo, Airtel etc.
RBI said these approvals are valid for a period of 18 months, during which these applicants will have to comply with guideline requirements and full other conditions stipulated by the regulator.
Payment banks are relatively new concept in India. It differs from conventional banks as they allow the customers to deposit a maximum of 1 lakh Rupees and can’t issue credit cards to the customers according to RBI regulations. They can however issue debit cards and internet banking facilities to the customers.
Citing the reason for the same, RBI said,
“It would be difficult at this stage to forecast the most successful likely model in the emerging business of payments.”
After getting the license, Vijay Shekhar Sharma, Founder and CEO, Paytm said,
“This is indeed a great moment for us. We have managed to significantly reduce the cash usage in the economy. With this nod from the RBI, we will be able to further drive our overall commitment to financial inclusion for the unbanked segment, modernize payment systems and build more trust for our services.”